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Bank of Japan Governor Hints at Possible Inflation Forecast Upward Revision - Signaling Further Rate Hikes
- Writing language: Korean
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Base country: Japan
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- Economy
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Summarized by durumis AI
- The Bank of Japan Governor stated that rate hikes are possible if inflation pressures rise, and that exchange rate fluctuations need to be monitored.
- While the recent yen weakness and rising import prices have raised the possibility of further rate hikes, it is expected that these increases will be gradual and avoid sharp increases.
- The Bank of Japan said it will maintain accommodative monetary conditions until its price stability target is achieved, indicating its intention to maintain its accommodative monetary policy stance after the March rate hike.
Bank of Japan Governor Kazuo Ueda said at a recent press conference that he would consider revising upward his future inflation forecast. This is interpreted as leaving open the possibility of additional interest rate hikes if upward pressure on prices intensifies.
Governor Ueda said, "If the current inflation outlook rises or upward risks increase significantly, we will adjust interest rates more quickly." The recent sustained depreciation of the yen is driving up import prices, raising concerns about the need for monitoring.
In fact, the yen/dollar exchange rate reached 155 yen last month, which was a major factor in the Japanese government and the Bank of Japan’s intervention for the first time in 32 years. Governor Ueda emphasized that “the impact of exchange rate fluctuations on prices has become greater than in the past” and that the government would closely monitor the trend of yen weakness in cooperation with the government.
While he avoided mentioning a specific time frame for additional interest rate hikes, he made it clear that he would take the lead in raising interest rates if prices rose significantly above initial projections. However, he added that he would avoid a sharp increase.
On the other hand, he said that he would maintain an accommodative monetary environment until the price stability target is achieved. This means that the current policy interest rate of 0.0-0.1% will be maintained, indicating a cautious approach to raising rates.
The Bank of Japan raised interest rates in March, but has repeatedly emphasized its commitment to maintaining an accommodative monetary policy stance even after lifting the negative interest rate. While some market observers believe that additional hikes are imminent this year, Governor Ueda’s comments suggest a gradual approach.
